NASDAQ:XIV looks set to continue up trend.
Investors looking for momentum can consider VelocityShares Daily Inverse VIX Short-Term ETN XIV given the explosive year to date performance and continued momentum of US risk markets. The fund recently hit a new 52-week high. Shares of XIV are up approximately 291.85% from its 52-week low of $22.05/share.
XIV focuses on providing -1x inverse exposure to VIX, Chicago Board Options Exchange (CBOE) Volatility Index. It charges 135 basis points in fees per year and has AUM of $760.92 million. The ETF tracks the SPVXSP index to replicate short term volatility movements in a basket of securities comprising of the nearest 2 months VIX futures.
Why the Move?
The market fear gauge, VIX, has been rallying lately, see earlier article. It hit a record low of 9.37 earlier in the month and is currently drastically under its short term resistance at around 11.80. A bearish view on VIX indicates positive sentiment towards the S&P 500, since the two linked and generally move in opposite directions. The market is currently experiencing the second-longest bull cycle, running more than eight years. Hence, an inverse exposure to the market fear gauge has performed very well over the last 24 months.
The following focuses on VIX performance which will drive XIV (Inverse Short Term Volatility Exposure) price movements. The S&P500 VIX Index appears to be in a falling trend; a continued decline within the falling trend can be expected. In addition, the current price action is now close to the bottom of a trend channel which may provide a upward reaction. The VIX currently has support at around 9.40 and resistance just below 18. A strong break through one of these levels would likely indicate a new direction for the index. The index is overall assessed as technically negative for the long term.